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Chronicles

The story behind the story

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AT&T, Sprint and T-Mobile will stop charging customers for spam texts

Three of the top four US wireless companies — AT&T, Sprint and T-Mobile — have agreed to stop billing American customers for the spam texts that millions of people have been tricked into receiving and sending out in recent years.

The Verge Carl Franzen

Context & Ripple Effects

The refund pledge lands in the middle of a two-year squeeze on carrier messaging revenue. The New York Times flagged back in October 2011 how free texting apps are threatening wireless carriers' core SMS business, and T-Mobile had already been forced to publicly rule out surcharges on app-driven traffic while raising prices elsewhere in September 2010 (declining to tax Twitter texts but hiking prices).

Against that backdrop, agreeing to stop billing customers for spam texts reads less like charity and more like defensive customer relations from three of the top four US carriers. The story's unusually wide pickup — CNET, Engadget, AllThingsD, DSLreports, Phandroid and even the Vermont Attorney General's office all carried it — signals that state attorneys general had skin in this game.

First-order effects

  • AT&T, Sprint and T-Mobile customers who were billed for texts they never wanted — either received or tricked into sending — stop paying for them, with refunds implied for past charges.
  • Verizon, named implicitly by the 'three of the top four' framing, is now the outlier among major US carriers still able to bill for spam texts.

Second-order effects

  • Verizon faces pressure to match its rivals' policy or become the visible holdout on a practice regulators have already singled out.
  • Sprint, ranked dead last in Consumer Reports' cell phone service survey and third-largest by subscribers, gains a rare service-quality talking point at no cost beyond forgone spam-text revenue.

Third-order effects

  • If state attorneys general keep extracting billing concessions carrier-by-carrier, spam-related charges follow the path of other legacy fees: priced out of existence rather than regulated out.
  • With over-the-top messaging apps already eroding per-message SMS economics since 2011, carriers are being pushed to treat messaging as a bundled utility rather than a metered profit center — accelerating the search for replacement revenue elsewhere in the bill.

The trend: US carriers are steadily surrendering micro-billed messaging revenue as over-the-top texting apps undercut SMS pricing and state regulators police billing practices.